I need help with the following questions as soon as possible, please! 1. Is the

Question

I need help with the following questions as soon as possible, please!

1. Is the deadweight loss due to a tax generally larger for a luxury good or a necessity?

2. When a tax is levied on a good

a. there is a decrease in the quantity of the good bought and sold in the market

b. the price that sellers receive exceeds the price that buyers pay.

c. government revenues exceed the loss in total welfare.

d. All of the above are correct.

3. The equilibrium price before a tax is imposed is:

: Scored out of: 82 Points xit this Exam as never been saved Figure 8-3 The vertical distance between points A and C represents a tax in the market Pice Pt Supply Demand 01 02

Explanation / Answer

1. Ans: Necessity

Explanation:

For a necessity good, demand is less elastic. The DWL will be large in case of necessity good.

2. Ans: there is a decrease in the quantity of good bought and sold in the market.

3. Ans: P2

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